Car Buying

What is an acquisition fee?

Do your homework and lease smart

This is part of our Car Buyer's Glossary series breaking down all the terms you need to know if you're buying a new or used car from a dealership.

The acquisition fee is what the lessor will charge you to set up your lease. It's intended to compensate the lessor for taking the time to verify your credit and insurance before extending the lease to you. The fee can range from several hundred to upwards of a thousand dollars, and it's not often disclosed up front as part of the negotiations about the lease.

It doesn't have to be like that. For one, you can compare the acquisition fee at similar nearby dealers. If the dealer you were planning on going to has a much higher fee, maybe you should go to another one or ask the dealer to reduce the fee. Remember, the acquisition fee is set by the lessor, but very rarely it is marked up by the dealer. Some dealers refuse to negotiate these markups, so you may have to go to another dealer. Others might. It doesn't hurt to shop around, and try to negotiate a fee that matches the average in you area.

The third technique is to negotiate to reduce the vehicle price – in lease language, the vehicle price is called the capitalized cost or "cap cost." You will want to do that anyways, but think about the various fees the dealer will charge you, and try to offset them with a lower cap cost. Because at the end of the day, you're paying the price for everything. Whether you reduce a fee, or reduce the cap cost, it doesn't matter to your bottom line.

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